Technical Analysis
Technically, GBP/USD may hold around 1.3300, facing resistance at the 1.3330 high and the 100-day SMA at 1.3369. The Relative Strength Index indicates limited upward movement, which may attract sellers in the market. The pound strengthens against most major currencies, notably gaining against the Swiss Franc. Over the week, the GBP has shown a 0.19% rise against the USD and a 0.33% increase against the Japanese Yen. The currency’s overall performance suggests moderate market confidence despite economic challenges. We see the US Dollar struggling, a trend reinforced by last week’s report on non-farm jobs for July 2025, which showed a gain of only 150,000 jobs, falling short of the expected 190,000. This weak job data, combined with the recent dip in the ISM Services PMI, indicates a slowing US economy. This softness in US economic indicators has been developing for a while, with core inflation trending down through the first half of the year. The latest Consumer Price Index reading for July 2025 came in at an annualized 2.8%, moving closer to the Federal Reserve’s target. This makes it unlikely that the Fed will consider raising rates, limiting the dollar’s potential strength.Market Outlook
On the other side of the pair, the British pound faces its own challenges with a nearly certain Bank of England rate cut expected this month. The recent drop in the UK’s Services PMI to 51.8 follows data showing that economic growth in the second quarter of 2025 was just 0.1%. This slowdown gives the central bank a clear reason to stimulate the economy by lowering borrowing costs. For traders dealing with financial contracts based on the value of currencies, this creates a complex but clear situation in the coming weeks. The conflict between a weak US dollar and a fundamentally weakening pound suggests significant fluctuations ahead, especially around the Bank of England’s policy announcement. We should consider using options strategies, like straddles, to trade this expected increase in price movement. Technically, the GBP/USD is approaching a resistance zone between 1.3330 and the 100-day average near 1.3370. Given the impending UK rate cut, we see this area as an opportunity to initiate bearish positions. Buying put options with an expiration after the Bank of England meeting could be a wise way to prepare for a downturn. Looking back, the current level above 1.3300 is significantly higher than the 1.2700-1.2800 range we saw for much of mid-2024. This elevation makes the pound look expensive, especially when its central bank is about to cut rates while others maintain their current rates. History suggests that such differences in policy often lead to currency weakness. Create your live VT Markets account and start trading now.VT Markets 라이브 계정을 만들고 지금 바로 거래를 시작하세요.
